South Baptist Society v. Clapp

By the Court, Parker, J. It is important to ascertain, at the outset, whether Eeuel Clapp, when he took the deed from McIntyre, held the property in his own absolute right, or as trustee for the plaintiff. It is contended by the plaintiff's counsel that Eeuel Clapp was the agent of the plaintiff in making the purchase, and took the deed to himself under such circumstances as to make him a trustee holding for the benefit of the plaintiff It is not claimed, nor does it appear by the facts found by the referee, that there was any express trust; but it is supposed to be a proper case for adjudging the existence of an implied trust in favor of the plaintiff. The principle of equity is well settled that a person who is placed in a situation of trust or confidence in reference to the subject of a sale, cannot be a purchaser of the property, on his own account. No persoú can be permitted to purchase an interest in property when he has a duty to perform inconsistent with the character of a purchaser. (Torrey v. Bank of Orleans, 9 Paige, 650. Hawley v. Cramer, 4 Cowen, 736. Van Epps v. Van Epps, 9 Paige, 237. Parkist v. Alexander, 1 John. Ch. 394. Conger v. Ring, 11 Barb. 356.) I do not understand from the facts in this case that Eeuel Clapp purchased from McIntyre as the agent of the plaintiff It is true the plaintiff desired to purchase the property, and Clapp requested McIntyre to sell to the corporation, and he refused because he was unwilling to take a mortgage from the plaintiff for the purchase monéy. Clapp then became the purchaser, and gave his own mortgage to McIntyre. This purchase was undoubtedly made with a view to benefit the plaintiff. By the arrangement made, Eeuel Clapp, instead of McIntyre, gave the plaintiff credit for the purchase money, upon mortgage. The plaintiff found in Eeuel Clapp a friend who would do for the corporation what McIntyre refused to do, and without whose aid the corporation could not have purchased tjie property. He assumed for it a [48] responsibility, placing himself between McIntyre and the plaintiff. He was the plaintiff’s partner and friend, but not its agent. He did not obtain the conveyance by any fraud. (Sweet v. Jacocks, 6 Paige, 355.) . His purchase was not inconsistent with any duty he had to perform. (9 Paige, 650.) He could have had no personal interest or selfish motive in making the purchase; for he sold to the plaintiff for the same price he paid. The transaction was not one by which Clapp, was to be benefited, but, on the contrary, one that might subject him to trouble and liability without any remuneration. It was not a purchase made with the money of the plaintiff. (Voorhees v. Presbyterian Church of Amsterdam, 8 Barb. 135.) The plaintiff advanced no funds, and there was no resulting trust. (2 R. S. 13, 3d ed.) The whole transaction was an open and a fair one. Clapp did not purchase to hold for the plaintiff, but to convey to the society, and he conveyed to the corporation accordingly. Assuming that it was agreed beforehand that Clapp should purchase. from McIntyre and give his bond and mortgage for the purchase money, and should then sell to the plaintiff and take back a like mortgage from the plaintiff, the whole transaction was fully carried out according to the agreement, and the plaintiff has been subjected to no loss or inconvenience by any act of Clapp or his representatives. I hold, then, that Reuel Clapp purchased in his own right, and was in no respect the trustee of the plaintiff. On the 27th of May, 1843, Clapp deeded to the plaintiff, and on the 29th of the same month took back the mortgage from the plaintiff. The deed appears to have been dated on Saturday, and the mortgage on Monday. It is supposed this discrepancy in date warrants the presumption that they were not parts of the same transaction. But there is nothing on this point left to presumption. The referee finds that “this mortgage was given to Clapp to secure him as is stated in the condition of the mortgage to McIntyre.” It is not necessary the deed and mortgage should bear the same date. If the mortgage was given to secure the purchase money of the deed, and so the referee has found, they are parts of the same transaction. (Cunningham v. Knight, 1 Barb. S. C. Rep. 406. Kettle v. Van Dyck, 1 [49] Sandf. Ch. Rep. 76.) The lien for the purchase money existed till the mortgage was executed. The deed and mortgage must therefore be considered together. Several objections are made by the plaintiff’s counsel to the validity of this mortgage, which it is necessary to consider. 1. The first is that it had no common seal. The referee finds that the plaintiff had not adopted any corporate seal by resolution, and had no seal previous to the execution, but that the trustees adopted the seal affixed opposite to the name of the president as the seal of the corporation, for the time being. This was undoubtedly sufficient. (21 Pick. 417. 6 Dana, 37.) 2. The second objection is, that there was no order or resolution of the board of trustees authorizing the mortgage. All the trustees, except one who had resigned, executed the mortgage. The referee finds that in executing the mortgage the trustees acted as a board' of trustees of the plaintiff, and that though all who signed it were not present at the same time, yet that a majority of the trustees were present a part of the time when it was executed. The finding of the referee on this question of fact makes the act as obligatory upon the plaintiff as if a formal resolution had been previously passed. 3. It is next objected that the mortgage was void because it had not been authorized by an order of the chancellor, according to the provisions of 3 R. S. 210, § 11. I am satisfied such an order was never necessary to enable a religious corpo- . ration, purchasing land, to execute a mortgage for the purchase money. The church never owned the land, except subject to the mortgage. It was a question of purchase, rather than of sale. The statute is only applicable to a case where the church is the owner of real property ; and its object is, that the court may control the disposition of the proceeds, and prevent a misapplication of trust funds. (The Dutch Church v. Mott, 7 Paige, 83, 84. 1 R. S. 599, § 1.) If no mortgage whatever had been executed by the plaintiff, Clapp would still have had an equitable lien for the purchase money, (2 Story's Eq. Jur. § 1217,) which he might have enforced by action of foreclosure, and, as against the plaintiff, it [50] would have been as effectual as a mortgage formally executed under the order of the court. It could not, however, have been foreclosed by advertisement. [Albany General Term, May 2, 1853. If I am right in the conclusions to which I have come, that Clapp was not a trustee for the plaintiff, and that the mortgage was valid and legally binding, it follows that the subsequent foreclosure by advertisement, the property having been bid off by Clapp and the sale having been conducted fairly and in good faith, was a bar to the plaintiff’s equity of redemption. The judgment entered on the report of the referee must therefore be affirmed, with costs. Parker, Wright and Harris, Justices.)